WELLS FARGO COMPANYMN
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
WFC$83.94-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000072971-24-000185
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)Current report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0000072971-24-000243
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)The baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 610 previous paragraphs and 608 current paragraphs.
414 unchanged; 134 reworded; 43 added; 39 removed; 23 previous and 17 current paragraphs rearranged.
Tables are not compared: 110 previous and 109 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (43)
Current report
Formal Agreement with the OCC Regarding Anti-Money Laundering and Sanctions Risk Management Practices
Current report
On September 12, 2024, the Company announced that Wells Fargo Bank, N.A. entered into a formal agreement with the OCC related to the bank’s anti-money laundering (AML) and sanctions risk management practices. The agreement’s requirements include enhancements to AML and sanctions risk management practices, obtaining the OCC’s acceptance of the bank’s program for assessing the AML and sanctions risks of new offerings, and then providing notice to the OCC before expanding certain of those offerings.
Current report
•total revenue decreased due to lower net interest income, partially offset by higher noninterest income;
Current report
•noninterest expense decreased slightly due to lower professional and outside services expense, largely offset by higher technology, telecommunications and equipment expense;
Current report
•total revenue decreased due to lower net interest income, partially offset by higher noninterest income;
Current report
Overview(continued)
Current report
•Nonperforming assets (NPAs) of $8.4 billion at September 30, 2024, decreased $59 million, or 1%, from
Current report
December 31, 2023, driven by a decrease in residential mortgage nonaccrual loans, partially offset by an increase in commercial and industrial nonaccrual loans. NPAs represented 0.92% of total loans at September 30, 2024.
Current report
Commissions and brokerage services fees increased driven by higher brokerage transaction activity.
Current report
Investment banking fees increased due to higher debt underwriting fees driven by increased activity, partially offset by lower advisory fee income.
Current report
Net servicing income increased driven by higher income from net hedge results related to mortgage servicing rights (MSRs) valuations.
Current report
Netgains from trading activities increased reflecting higher trading activity across most fixed income asset classes, partially offset by lower revenue in equities.
Current report
Net gains (losses) from debt securities decreased reflecting losses related to a repositioning of our investment securities portfolio.
Current report
Commissions and brokerage services fees increased driven by higher brokerage transaction activity.
Current report
Net servicing income increased driven by higher income from net hedge results related to MSR valuations.
Current report
Net gains (losses) from debt securities decreased reflecting losses related to a repositioning of our investment securities portfolio.
Current report
•higher realized gains on equity securities from our venture capital investments; and
Current report
Operating losses decreased driven by lower expense for legal actions.
Current report
Noninterest expense decreased reflecting lower operating costs and lower operating losses, as well as the impact of efficiency initiatives.
Current report
•higher other noninterest income related to renewable energy tax credit investments.
Current report
•higher other noninterest income related to renewable energy tax credit investments.
Current report
we entered into a definitive agreement to sell the non-agency third-party servicing segment of our commercial mortgage servicing business, including the related mortgage servicing rights and servicer advances. We will continue to service agency and government-sponsored enterprise loans and loans held on our balance sheet. Table 6e and Table 6f provide additional information for Corporate and Investment Banking.
Current report
Revenue decreased slightly, reflecting:
Current report
•higher net gains from trading activities reflecting higher trading activity across most fixed income asset classes, partially offset by lower revenue in equities; and
Current report
•higher investment banking fees due to higher debt underwriting fees driven by increased activity, partially offset by lower advisory fee income.
Current report
•higher commissions and brokerage services fees driven by higher brokerage transaction activity;
Current report
•lower operating costs; and
Current report
•the impact of efficiency initiatives.
Current report
Total deposits (period-end) increased predominantly driven by higher balances in our retail brokerage business.
Current report
•higher commissions and brokerage services fees driven by higher brokerage transaction activity;
Current report
•higher net losses from debt securities related to a repositioning of our investment securities portfolio;
Current report
Noninterest expense increased driven by higher operating losses due to higher expense for customer remediation activities.
Current report
•higher net losses from debt securities related to a repositioning of our investment securities portfolio.
Current report
•higher operating losses due to higher expense for customer remediation activities; and
Current report
•an additional expense of$273 millionfor the estimated FDIC special assessment.
Current report
Total deposits (average) increased driven by issuances of CDs by corporate treasury.
Current report
Deposits decreased from December 31, 2023, reflecting:
Current report
Total nonaccrual loans decreased $84 million from December 31, 2023, driven by a decrease in residential mortgage nonaccrual loans, partially offset by an increase in commercial and industrial nonaccrual loans.
Current report
Risk Management – Asset/Liability Management(continued)
Current report
Risk Management – Asset/Liability Management(continued)
Showing the first 40 of 43 passages. Open the source sections for the rest.
Removed paragraphs (39)
Previous report
Capital Matters
Previous report
On June 28, 2024, the Company announced that it had completed the 2024 Comprehensive Capital Analysis and Review (CCAR) stress test process. The Company expects its stress capital buffer (SCB) to be 3.80% for the period October 1, 2024, through September 30, 2025. The FRB has indicated that it will publish the Company's final SCB by August 31, 2024. Our SCB for the period October 1, 2023, through September 30, 2024, is 2.90%.
Previous report
On July 23, 2024, the Board approved an increase to the Company's third quarter 2024 common stock dividend to $0.40 per share.
Previous report
In July 2024, we issued $2.0 billion of our Preferred Stock, Series FF.
Previous report
•total revenue increased due to higher noninterest income, partially offset by lower net interest income;
Previous report
•Nonperforming assets (NPAs) of $8.7 billion at June 30, 2024, increased $207 million, or 2%, from December 31, 2023, driven by an increase in commercial real estate nonaccrual loans, predominantly within the office property type. NPAs represented 0.94% of total loans at June 30, 2024.
Previous report
Netgains from trading activities increased driven by higher revenue in structured products, equities, and foreign exchange, partially offset by lower revenue in rates.
Previous report
•higher unrealized gains on nonmarketable equity securities from our venture capital investments.
Previous report
Lease income increased driven by a gain associated with the resolution of a legacy lease transaction.
Previous report
(continued from previous page)
Previous report
Provision for credit losses reflected an increase in the allowance for credit card loans, partially offset by a lower allowance for auto loans and residential mortgage loans.
Previous report
Noninterest expense decreased due to lower operating costs and the impact of efficiency initiatives, partially offset by higher advertising and occupancy expense.
Previous report
Provision for credit losses reflected a decrease in the allowance for auto loans and residential mortgage loans, partially offset by a higher allowance for credit card loans.
Previous report
(1)In second quarter 2024, we prospectively transferred our commercial auto business from Asset-Based Lending and Leasing to Middle Market Banking.
Previous report
Revenue decreased driven by:
Previous report
Revenue decreased driven by:
Previous report
(1)In second quarter 2024, we prospectively transferred our commercial auto business from Asset-Based Lending and Leasing to Middle Market Banking.
Previous report
•higher net gains from trading activities driven by higher revenue in equities, including a gain of $122 million related to an exchange of shares of Visa Inc. Class B common stock, and structured products; and
Previous report
Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives.
Previous report
•higher operating losses;
Previous report
•lower operating costs.
Previous report
Total deposits (average) decreased due to customer migration to higher yielding alternatives.
Previous report
The Federal Trade Commission issued a final rule that broadly prohibits worker non-compete provisions. The rule has an effective date of September 4, 2024, but is pending the results of third party litigation challenging the rule. If the rule becomes effective in its current form, we would expect an acceleration of expenses related to certain deferred compensation award programs for retired and retirement eligible employees in our WIM business that feature a non-compete provision as a condition of award vesting.
Previous report
Provision for credit losses reflected an increase in allowance for credit losses.
Previous report
•an additional expense of $52 million for the estimated FDIC special assessment.
Previous report
Noninterest expense increased due to:
Previous report
•an additional expense of$336 millionfor the estimated FDIC special assessment.
Previous report
Deposits increased from December 31, 2023, reflecting:
Previous report
Consumer nonaccrual loans were stable compared with December 31, 2023.
Previous report
In June 2024, we redeemed all of our Preferred Stock, Series S. In July 2024, we issued $2.0 billion of our Preferred Stock, Series FF. For additional information, see Note 9 (Preferred Stock) to Financial Statements in this Report.
Previous report
On July 23, 2024, the Board approved an increase to the Company's third quarter 2024 common stock dividend to $0.40 per share.
Previous report
Rules adopted by the FRB and the FDIC under the Dodd-Frank Act require large financial institutions, including Wells Fargo, to prepare and periodically submit resolution plans, also known as “living wills,” designed to facilitate their rapid and orderly resolution in the event of material financial distress or failure. Under the rules, rapid and orderly resolution means a reorganization or liquidation of the covered company under the U.S. Bankruptcy Code that can be accomplished in a reasonable period of time and in a manner that substantially mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. In addition to the Company’s resolution plan, our national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), is also required to prepare and periodically submit a resolution plan. If the FRB and/or FDIC determine that our resolution plan has deficiencies, they may impose more stringent capital, leverage or liquidity requirements on us or restrict our growth, activities or operations until we adequately remedy the deficiencies. If the FRB and/or FDIC ultimately determine that we have been unable to remedy any deficiencies, they could require us to divest certain assets or operations. On June 21, 2024, the FRB and FDIC announced that the Company’s most recent resolution plan did not have any shortcomings or deficiencies.
Previous report
If Wells Fargo were to fail, it may be resolved in a bankruptcy proceeding or, if certain conditions are met, under the resolution regime created by the Dodd-Frank Act known as the “orderly liquidation authority.” The orderly liquidation authority allows for the appointment of the FDIC as receiver for a systemically important financial institution that is in default or in danger of default if, among other things, the resolution of the institution under the U.S. Bankruptcy Code would have serious adverse effects on financial stability in the United States. If the FDIC is appointed as receiver for the Parent, then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would determine the powers of the receiver and the rights and obligations of our security holders. The FDIC’s orderly liquidation authority requires that security holders of a company in receivership bear all losses before U.S. taxpayers are exposed to any losses. There are substantial differences in the rights of creditors between the orderly liquidation authority and the U.S. Bankruptcy Code, including the right of the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain circumstances and the use of an administrative claims procedure instead of a judicial procedure to determine creditors’ claims.
Previous report
The strategy described in our most recent resolution plan is a single point of entry strategy, in which the Parent would be the only material legal entity to enter resolution proceedings. However, the strategy described in our resolution plan is not binding in the event of an actual resolution of Wells Fargo, whether conducted under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority. The FDIC has announced that a single point of entry strategy may be a desirable strategy under its implementation of the orderly liquidation authority, but not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible.
Previous report
To facilitate the orderly resolution of systemically important financial institutions in case of material distress or failure, federal banking regulations require that institutions, such as Wells Fargo, maintain a minimum amount of equity and unsecured debt to absorb losses and recapitalize operating subsidiaries. Federal
Previous report
Regulatory Matters(continued)
Previous report
banking regulators have also required measures to facilitate the continued operation of operating subsidiaries notwithstanding the failure of their parent companies, such as limitations on parent guarantees, and have issued guidance encouraging institutions to take legally binding measures to provide capital and liquidity resources to certain subsidiaries to facilitate an orderly resolution. In response to the regulators’ guidance and to facilitate the orderly resolution of the Company, on June 28, 2017, the Parent entered into a support agreement, as amended and restated on June 26, 2019 (the “Support Agreement”), with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), the Bank, Wells Fargo Securities, LLC (“WFS”), Wells Fargo Clearing Services, LLC (“WFCS”), and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes (the “Covered Entities”) or identified from time to time as related support entities in our resolution plan (the “Related Support Entities”). Pursuant to the Support Agreement, the Parent transferred a significant amount of its assets, including the majority of its cash, deposits, liquid securities and intercompany loans (but excluding its equity interests in its subsidiaries and certain other assets), to the IHC and will continue to transfer those types of assets to the IHC from time to time. In the event of our material financial distress or failure, the IHC will be obligated to use the transferred assets to provide capital and/or liquidity to the Bank, WFS, WFCS, and the Covered Entities pursuant to the Support Agreement. Under the Support Agreement, the IHC will also provide funding and liquidity to the Parent through subordinated notes and a committed line of credit, which, together with the issuance of dividends, is expected to provide the Parent, during business as usual operating conditions, with the same access to cash necessary to service its debts, pay dividends, repurchase its shares, and perform its other obligations as it would have had if it had not entered into these arrangements and transferred any assets. If certain liquidity and/or capital metrics fall below defined triggers, or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code, the subordinated notes would be forgiven, the committed line of credit would terminate, and the IHC’s ability to pay dividends to the Parent would be restricted, any of which could materially and adversely impact the Parent’s liquidity and its ability to satisfy its debts and other obligations, and could result in the commencement of bankruptcy proceedings by the Parent at an earlier time than might have otherwise occurred if the Support Agreement were not implemented. The respective obligations under the Support Agreement of the Parent, the IHC, the Bank, and the Related Support Entities are secured pursuant to a related security agree…
Excerpt shortened here; the source contains the full paragraph.
Previous report
In addition to our resolution plans, we must also prepare and periodically submit to the FRB a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets, securities, loan portfolios or businesses. The Bank must also prepare and periodically submit to the OCC a recovery plan that sets forth the Bank’s plan to remain a going concern when the Bank is experiencing considerable financial or operational stress, but has not yet deteriorated to the point where liquidation or resolution is imminent. If either the FRB or the OCC determines that our recovery plan is deficient, they may impose fines, restrictions on our business or ultimately require us to divest assets.
Previous report
•developments in our mortgage banking business, including any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and any changes in industry standards, regulatory or judicial requirements, or our strategic plans for the business;
Reworded paragraphs (134)
Previous wording
We have accrued for the probable and estimable costs related to our customer remediation activities, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators. We had $678 million and $819 million of accrued liabilities for customer remediation activities as of June 30, 2024, and December 31, 2023, respectively. As our ongoing reviews continue and as we continue to strengthen our risk and control infrastructure, we have identified and may in the future identify additional items or areas of potential concern. To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate.
Current wording
We have accrued for the probable and estimable costs related to our customer remediation activities, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators. We had $241 million and $819 million of accrued liabilities for customer remediation activities as of September 30, 2024, and December 31, 2023, respectively. As our ongoing reviews continue and as we continue to strengthen our risk and control infrastructure, we have identified and may in the future identify additional items or areas of potential concern. To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate.
Previous wording
In November 2023, the Federal Deposit Insurance Corporation (FDIC) finalized a rule to recover losses to the FDIC deposit insurance fund as a result of bank failures in the first half of 2023. Under the rule, the FDIC will collect a special assessment based on an insured depository institution’s estimated amount of uninsured deposits. Upon the FDIC’s finalization of the rule, we expensed an estimated amount of our special assessment of $1.9 billion (pre-tax) in fourth quarter 2023. During 2024, the FDIC provided updates on losses to the deposit insurance fund, and we expensed an additional $52 million and $336 million (pre-tax) in the second quarter and first half of 2024, respectively, for the estimated amount of the special assessment. We expect the ultimate amount of the special assessment may continue to change as the FDIC determines the actual net losses to the deposit insurance fund.
Current wording
In November 2023, the Federal Deposit Insurance Corporation (FDIC) finalized a rule to recover losses to the FDIC deposit insurance fund as a result of bank failures in the first half of 2023. Under the rule, the FDIC will collect a special assessment based on an insured depository institution’s estimated amount of uninsured deposits. Upon the FDIC’s finalization of the rule, we expensed an estimated amount of our special assessment of $1.9 billion (pre-tax) in fourth quarter 2023. During 2024, the FDIC provided updates on losses to the deposit insurance fund, which resulted in a reversal of expense of $63 million (pre-tax) in third quarter 2024 and an additional expense of $273 million (pre-tax) in the first nine months of 2024 for the estimated amount of the special assessment. We expect the ultimate amount of the special assessment may continue to change as the FDIC determines the actual net losses to the deposit insurance fund.
Previous wording
In second quarter 2024, we generated $4.9 billion of net income and diluted earnings per common share (EPS) of $1.33, compared with $4.9 billion of net income and diluted EPS of $1.25 in the same period a year ago. In the first half of 2024, we generated $9.5 billion of net income and diluted EPS of $2.53, compared with $9.9 billion of net income and diluted EPS of $2.48 in the same period a year ago. Financial performance for the second quarter and first half of 2024, compared with the same periods a year ago, included the following:
Current wording
In third quarter 2024, we generated $5.1 billion of net income and diluted earnings per common share (EPS) of $1.42, compared with $5.8 billion of net income and diluted EPS of $1.48 in the same period a year ago. Financial performance for third quarter 2024, compared with the same period a year ago, included the following:
Previous wording
We maintained a strong capital position in the first half of 2024, with total equity of $178.1 billion at June 30, 2024, compared with $187.4 billion at December 31, 2023. In addition, capital and liquidity at June 30, 2024, included the following:
Current wording
We maintained a strong capital position in the first nine months of 2024, with total equity of $185.0 billion at September 30, 2024, compared with $187.4 billion at December 31, 2023. In addition, capital and liquidity at September 30, 2024, included the following:
Previous wording
•our Common Equity Tier 1 (CET1) ratio was 11.01% under the Standardized Approach (our binding ratio), which continued to exceed the regulatory minimum and buffers of 8.90%;
Current wording
•our Common Equity Tier 1 (CET1) ratio was 11.34% under the Standardized Approach (our binding ratio), which continued to exceed the regulatory minimum and buffers of 8.90%. As of October 1, 2024, our stress capital buffer increased to 3.80%, resulting in a CET1 regulatory minimum and buffers of 9.80%;
Previous wording
•our total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 24.78%, compared with the regulatory minimum of 21.50%; and
Current wording
•our total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 25.29%, compared with the regulatory minimum of 21.50%; and
Previous wording
•our liquidity coverage ratio (LCR) was 124%, which continued to exceed the regulatory minimum of 100%.
Current wording
•our liquidity coverage ratio (LCR) was 127%, which continued to exceed the regulatory minimum of 100%.
Previous wording
•The allowance for credit losses (ACL) for loans of $14.8 billion at June 30, 2024, decreased $299 million from December 31, 2023.
Current wording
•The allowance for credit losses (ACL) for loans of $14.7 billion at September 30, 2024, decreased $349 million from December 31, 2023.
Previous wording
•Our provision for credit losses for loans was $2.2 billion in the first half of 2024, compared with $3.0 billion in the same period a year ago. The ACL for loans and the provision for credit losses for loans reflected decreases for auto loans, commercial real estate loans, and residential mortgage loans, partially offset by increases for credit card loans.
Current wording
•Our provision for credit losses for loans was $3.2 billion in the first nine months of 2024, compared with $4.1 billion in the same period a year ago. The ACL for loans and the provision for credit losses for loans reflected decreases for auto loans, commercial real estate loans, and residential mortgage loans, partially offset by increases for credit card loans.
Previous wording
•The allowance coverage for total loans was 1.61% at both June 30, 2024, and December 31, 2023.
Current wording
•The allowance coverage for total loans was 1.62% at September 30, 2024, compared with 1.61% at December 31, 2023.
Previous wording
•Commercial portfolio net loan charge-offs were $468 million, or 35 basis points of average commercial loans, in second quarter 2024, compared with net loan charge-offs of $200 million, or 15 basis points, in the same period a year ago, due to higher losses in all commercial portfolios, primarily in our commercial real estate portfolio driven by the office property type.
Current wording
•Commercial portfolio net loan charge-offs were $323 million, or 24 basis points of average commercial loans, in third quarter 2024, compared with net loan charge-offs of $188 million, or 13 basis points, in the same period a year ago, primarily due to higher losses in our commercial real estate portfolio driven by the office property type.
Previous wording
•Consumer portfolio net loan charge-offs were $833 million, or 88 basis points of average consumer loans, in second quarter 2024, compared with net loan charge-offs of $564 million, or 58 basis points, in the same period a year ago, due to higher losses in our credit card portfolio.
Current wording
•Consumer portfolio net loan charge-offs were $788 million, or 83 basis points of average consumer loans, in third quarter 2024, compared with net loan charge-offs of $662 million, or 67 basis points, in the same period a year ago, due to higher losses in our credit card portfolio driven by higher loan balances, partially offset by lower losses in our auto portfolio.
Previous wording
•Criticized loans in the commercial portfolio were $35.5 billion at June 30, 2024, compared with $33.0 billion at December 31, 2023, predominantly driven by increases in criticized commercial and industrial loans and criticized commercial real estate loans.
Current wording
•Criticized loans in the commercial portfolio were $37.6 billion at September 30, 2024, compared with $33.0 billion at December 31, 2023, primarily driven by increases in criticized commercial and industrial loans.
Previous wording
Wells Fargo net income for second quarter 2024 was $4.9 billion ($1.33 diluted EPS), compared with $4.9 billion ($1.25 diluted EPS) in the same period a year ago. Net income was stable in second quarter 2024, compared with the same period a year ago, predominantly due to a $1.2 billion decrease in net interest income, a $321 million increase in income tax expense, and a $306 million increase in noninterest expense, offset by a $1.4 billion increase in noninterest income and a $477 million decrease in provision for credit losses.
Current wording
Wells Fargo net income for third quarter 2024 was $5.1 billion ($1.42 diluted EPS), compared with $5.8 billion ($1.48 diluted EPS) in the same period a year ago. Net income decreased in third quarter 2024, compared with the same period a year ago, predominantly due to a $1.4 billion decrease in net interest income, partially offset by a $924 million increase in noninterest income.
Previous wording
Net income for the first half of 2024 was $9.5 billion ($2.53 diluted EPS), compared with $9.9 billion ($2.48 diluted EPS) in the same period a year ago. Net income decreased in the first half of 2024, compared with the same period a year ago, predominantly due to a $2.3 billion decrease in net interest income and a $1.0 billion increase in noninterest expense, partially offset by a $2.6 billion increase in noninterest income.
Current wording
Net income for the first nine months of 2024 was $14.6 billion ($3.94 diluted EPS), compared with $15.7 billion ($3.96 diluted EPS) in the same period a year ago. Net income decreased in the first nine months of 2024, compared with the same period a year ago, predominantly due to a $3.8 billion decrease in net interest income and a $922 million increase in noninterest expense, partially offset by a $3.6 billion increase in noninterest income.
Previous wording
Net interest income and net interest margin decreased in both the second quarter and first half of 2024, compared with the same periods a year ago, driven by the impact of higher interest rates on interest-bearing deposits and long-term debt, as well as lower loan balances, partially offset by higher interest rates on interest-earning assets. Late in second quarter 2024, we increased pricing on sweep deposits in advisory brokerage accounts, which we expect will lower future net interest income.
Current wording
Net interest income and net interest margin decreased in both the third quarter and first nine months of 2024, compared with the same periods a year ago, driven by the impact of higher interest rates on interest-bearing liabilities, including a deposit mix shift to interest-bearing deposits, as well as lower loan balances, partially offset by higher interest rates on interest-earning assets.
Previous wording
(1)The average balance amounts represent amortized costs, except for certain held-to-maturity (HTM) debt securities, which exclude unamortized basis adjustments related to the transfer of those securities from available-for-sale (AFS) debt securities. The average interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
Current wording
(1)The average balance amounts represent amortized costs, except for certain held-to-maturity (HTM) debt securities, which exclude unamortized basis adjustments related to the transfer of those securities from available-for-sale (AFS) debt securities. Amortized cost amounts exclude any unrealized gains or losses, which are included in other noninterest-earning assets and other noninterest-bearing liabilities. The average interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
Previous wording
(3)Includes taxable-equivalent adjustments of $89 million and $105 million for the quarters ended June 30, 2024 and 2023, respectively, and $178 million and $212 million for the first half of 2024 and 2023, respectively, predominantly related to tax-exempt income on certain loans and securities.
Current wording
(3)Includes taxable-equivalent adjustments of $84 million and $104 million for the quarters ended September 30, 2024 and 2023, respectively, and $262 million and $316 million for the first nine months of 2024 and 2023, respectively, predominantly related to tax-exempt income on certain loans and securities.
Previous wording
Net gains (losses) from equity securities increased driven byhigher unrealized gains on nonmarketable equity securities from our venture capital investments.
Current wording
Net gains (losses) from equity securities increased driven byhigher realized gains on equity securities from our venture capital investments.
Previous wording
Netgains from trading activities increased driven by higher revenue in equities and structured products.
Current wording
Netgains from trading activities increased driven by higher revenue in structured products, foreign exchange, and equities.
Previous wording
•lower impairment of equity securities from our venture capital investments; and
Current wording
•lower impairment of equity securities from our venture capital investments.
Previous wording
(1)Includes expenses for customer remediation activities of $184 million and $106 million for second quarter 2024 and 2023, respectively, and $612 million and $163 million for the first half of 2024 and 2023, respectively.
Current wording
(1)Includes expenses for customer remediation activities of $22 million and $(30) million for third quarter 2024 and 2023, respectively, and $634 million and $133 million for the first nine months of 2024 and 2023, respectively.
Previous wording
Personnel expense decreased due tothe impact of efficiency initiatives, partially offset by higher revenue-related compensation expense driven by higher fees in our Wealth and Investment Management business.
Current wording
Personnel expense decreased slightly due tothe impact of efficiency initiatives and lower severance expense, largely offset by higher revenue-related compensation expense driven by higher fees in our Wealth and Investment Management business.
Previous wording
Personnel expense increased due to higher revenue-related compensation expense driven by higher fees in our Wealth and Investment Management business, partially offset by the impact of efficiency initiatives.
Current wording
Personnel expense increased slightly due to higher revenue-related compensation expense driven by higher fees in our Wealth and Investment Management business, largely offset by the impact of efficiency initiatives and lower severance expense.
Previous wording
Other expense increased reflecting an additional expense of$336 million for the estimated FDIC special assessment. For additional information on the FDIC’s special assessment, see Note 18 (Revenue and Expenses) to Financial Statements in this Report.
Current wording
Other expense increased reflecting an additional expense of$273 million for the estimated FDIC special assessment. For additional information on the FDIC’s special assessment, see Note 18 (Revenue and Expenses) to Financial Statements in this Report.
Previous wording
The increase in the effective income tax rate for the second quarter and first half of 2024, compared with the same periods a year ago, was driven by the impacts related to the expanded use of the proportional amortization method of accounting for renewable energy tax credit investments. For additional information on our adoption in first quarter 2024 of Accounting Standards Update (ASU) 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.
Current wording
The increase in the effective income tax rate for third quarter 2024, compared with the same period a year ago, was driven by the impacts of discrete tax benefits in third quarter 2023 and the impacts related to theadoption of ASU 2023-02 in first quarter 2024 for our renewable energy tax credit investments. The increase in the effective income tax rate for the first nine months of 2024, compared with the same period a year ago, was driven by the impacts related to theadoption of ASU 2023-02 in first quarter 2024. For additional information on our adoption of Accounting Standards Update (ASU) 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.
Previous wording
•a decline in loan balances in our Auto business due to lower origination volumes reflecting credit tightening actions;
Current wording
•a decline in loan balances in our Auto business as paydowns exceeded originations reflecting our actions related to credit tightening;
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•an increase in loan balances in our Credit Card business driven by higher point of sale volume and new account growth.
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•an increase in loan balances in our Credit Card business due to higher point of sale volume driven by new account growth.
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•higher deposit-related fees reflecting higher treasury management fees on commercial accounts driven by increased transaction service volumes and repricing.
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•higher deposit-related fees reflecting higher treasury management fees on commercial accounts driven by increased transaction service volumes and repricing; and
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•higher deposit-related fees reflecting higher treasury management fees on commercial accounts driven by increased transaction service volumes and repricing.
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•higher deposit-related fees reflecting higher treasury management fees on commercial accounts driven by increased transaction service volumes and repricing; and
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Noninterest expense decreased due to lower personnel expense reflecting the impact of efficiency initiatives, and lower operating costs.
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Noninterest expense decreased due to lower personnel expense reflecting the impact of efficiency initiatives.
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Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real
Current wording
Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity and fixed income solutions as well as sales, trading, and research capabilities. In August 2024,
Previous wording
Noninterest expense increased driven by higher operating costs, partially offset by the impact of efficiency initiatives.
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Noninterest expense increased driven by higher operating losses and operating costs, partially offset by the impact of efficiency initiatives.
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•higher net gains from trading activities driven by higher revenue in structured products, equities, and foreign exchange, partially offset by lower revenue in rates;
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•higher net gains from trading activities driven by higher revenue in structured products, foreign exchange, and equities;
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Provision for credit losses reflected a decrease in the allowance for credit losses, primarily driven by commercial real estate loans.
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Provision for credit losses reflected a decrease in the allowance for credit losses driven by commercial real estate loans.
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Total loans (average and period-end)decreased driven by lower origination volumes reflecting decreased loan demand.
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Total loans (average and period-end)decreased driven by lower commercial real estate loan origination volumes reflecting decreased demand.
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•higher investment advisory and other asset-based fees driven by higher asset-based fees reflecting higher market valuations;
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•higher investment advisory and other asset-based fees driven by higher asset-based fees reflecting higher market valuations; and
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•higher personnel expense driven by higher revenue-related compensation; and
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•higher personnel expense driven by higher revenue-related compensation;
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•higher investment advisory and other asset-based fees driven by higher asset-based fees reflecting higher market valuations;
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•higher investment advisory and other asset-based fees driven by higher asset-based fees reflecting higher market valuations; and
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•lower net interest income driven by lower deposit balances and higher deposit costs.
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•lower net interest income driven by lower deposit balances, customers reallocating cash into higher yielding alternatives, and higher deposit costs reflecting increased pricing on sweep deposits in advisory brokerage accounts.
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Current report — wording carried from elsewhere
•average deposits increased driven by growth in Corporate and Investment Banking and Commercial Banking, partially offset by reductions in Consumer Banking and Lending and Corporate.
Current report — wording carried from elsewhere
In the first nine months of 2024, we generated $14.6 billion of net income and diluted EPS of $3.94, compared with $15.7 billion of net income and diluted EPS of $3.96 in the same period a year ago. Financial performance for the first nine months of 2024, compared with the same period a year ago, included the following:
Current report — wording carried from elsewhere
•provision for credit losses reflected decreases for auto loans, commercial real estate loans, and residential mortgage loans, partially offset by increases for credit card loans;
Current report — wording carried from elsewhere
•average loans decreased driven by a decline in loans in both our commercial and consumer loan portfolios; and
Current report — wording carried from elsewhere
Provision for credit losses reflected an increase in the allowance for credit card loans.
Current report — wording carried from elsewhere
Provision for credit losses reflected an increase in the allowance for credit card loans.
Current report — wording carried from elsewhere
Total deposits (average and period-end) increased driven by additions of deposits from new and existing customers.
Current report — wording carried from elsewhere
•lower net interest income driven by higher deposit costs reflecting increased pricing on sweep deposits in advisory brokerage accounts and customers reallocating cash into higher yielding alternatives.
Current report — wording carried from elsewhere
Total deposits (average) decreased driven by customer migration to higher yielding alternatives.
Current report — wording carried from elsewhere
Total assets (average) increased reflecting an increase in cash and due from banks, and interest-earning deposits with banks that are managed by corporate treasury.
Current report — wording carried from elsewhere
Our interest rate sensitive noninterest income and expense are impacted by mortgage banking activities that may have
Current report — wording carried from elsewhere
To help achieve this objective, the Board establishes liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. These guidelines are
Current report — wording carried from elsewhere
Table 26 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.
Current report — wording carried from elsewhere
in the future will be used for the same purposes. Depending on market conditions and our liquidity position, we may redeem or
Current report — wording carried from elsewhere
capital actions for all large BHCs and also reviews the Company’s proposed capital actions.
Current report — wording carried from elsewhere
•our ability to realize any efficiency ratio or expense target as part of our expense management initiatives, including as a
Current report — wording carried from elsewhere
For additional information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission,
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Previous report — wording carried elsewhere
For additional information about capital planning, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.
Previous report — wording carried elsewhere
Investment banking fees increased due toincreased activity across all products.
Previous report — wording carried elsewhere
Operating losses increased driven byhigher expense for legal actions and higher expense for customer remediation activities related to the further refinement of the remediation costs for historical mortgage lending and other consumer products matters.
Previous report — wording carried elsewhere
Advertising and promotion expense increased due to higher marketing volume.
Previous report — wording carried elsewhere
estate lending and servicing, equity and fixed income solutions as well as sales, trading, and research capabilities. Table 6e and Table 6f provide additional information for Corporate and Investment Banking.
Previous report — wording carried elsewhere
•higher investment banking fees due to increased activity across all products;
Previous report — wording carried elsewhere
•lower net interest income driven by lower deposit balances.
Previous report — wording carried elsewhere
•the impact of efficiency initiatives; and
Previous report — wording carried elsewhere
Total assets (average and period-end) increased reflecting:
Previous report — wording carried elsewhere
•paydowns and maturities of HTM debt securities.
Previous report — wording carried elsewhere
•customer migration to higher yielding alternatives; and
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loan portfolio, see the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 2023 Form 10-K.
Previous report — wording carried elsewhere
In addition to the net interest income sensitivity above, we also measure and evaluate the economic value sensitivity (EVS) of our balance sheet. EVS is the change in the present value of the life-time cash flows of the Company’s assets and liabilities
Previous report — wording carried elsewhere
Management – Asset/Liability Management – Market Risk” section in our 2023 Form 10-K.
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instruments used in our trading activities are reflected in net gains from trading activities. For additional information on the financial instruments used in our trading activities and the income from these trading activities, see Note 2 (Trading Activities) to Financial Statements in this Report.
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LIQUIDITY RISK AND FUNDING Liquidity risk is the risk arising from the inability of the Company to meet obligations when they come due, or roll over funds at a reasonable cost, without incurring heightened costs. In the ordinary course of business, we enter into contractual obligations that may require future cash payments, including funding for customer loan requests,
Previous report — wording carried elsewhere
Liquidity Standards We are subject to a rule issued by the FRB, OCC and FDIC that establishes a quantitative minimum liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires a covered banking organization to hold high-quality liquid assets (HQLA) in an amount equal to or greater than its projected net cash outflows during a 30-day
Previous report — wording carried elsewhere
derivative exposures and commitments over a one-year horizon period. The NSFR applies to the Company and to our IDIs with total assets of $10 billion or more. As of June 30, 2024, we were compliant with the NSFR requirement.
Previous report — wording carried elsewhere
pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings, as well as borrowings from the FHLB. For additional information, see the
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“Pledged Assets” section of Note 16 (Pledged Assets and Collateral) to Financial Statements in this Report.
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Wells Fargo. The FRB assesses, among other things, the overall financial condition, risk profile, and capital adequacy of BHCs when evaluating their capital plans.
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“Living Will” Requirements and Related Matters
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price of our stock), regulatory and legal considerations, including regulatory requirements under the Federal Reserve Board’s capital plan rule, and other factors deemed relevant by the Company, and may be subject to regulatory approval or conditions.